Attack of the zombies: Banks may be to blame for Britain’s measly productivity growth

A lack of lending leaves Britons working less efficiently on lower wages

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COMPARED with most other rich countries, the British economy looks strong. In 2015 GDP grew by 2.2%, more than the 1.5% seen in the euro zone. And yet, nearly a decade after the financial crisis began, there is one serious weakness: productivity (defined as the amount each worker produces in a given period of time). In the period 2000-08 annual productivity growth was nearly 2%. In 2009-14, though, it was pretty much zero, far below what rivals like America and Germany have achieved. Stagnant productivity growth explains why British real wages are still 5% below their pre-crisis peak.
On February 24th the IMF released its yearly assessment of the state of the British economy. It zooms in on the productivity slowdown. Using a fine-grained dataset, containing over 30m observations of British firms between 2005 and 2014 (including their location and income statements), the IMF looks at …